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Summary of our market study
The global wine market experienced a downturn in 2020, with a 10% decrease in value to US$ 326.6 billion, largely due to the impact of the health crisis. This contrasted the pre-crisis upward trend that saw the market at US$ 364.25 billion, indicating a significant drop from its earlier growth. Global wine production mirrored this decline with a 12% reduction in volume, producing 258 million hectoliters, attributed to adverse weather conditions. Despite this, wine consumption remained relatively stable albeit with a slight decrease, reported at 237 million hectoliters.
The UK wine market saw growth in wine bars with industry revenue reaching £836.7 million in 2021, growing faster than the overall UK economy. The market is labor intensive with substantial costs in wages and purchases, and despite the emergence of 1,878 wine bar businesses in 2021, the market remains fragmented with low concentration among players. However, wine bars continue to increase in popularity, influenced by real household disposable income and consumer purchasing power.
Evolving UK Wine Consumer Landscape and Market Dynamics
In recent years, the UK has seen a period of growth in its wine market, riding on the crest of increased wine consumption and an upswing in domestic wine production. The interest in unique and locally produced wines has particularly bolstered the wine bar sector which now accounts for a sizeable market value of between £800 and £900 million as of 2021. This mark of profitability is underscored by a 7.3% growth observed, outpacing the general economy. What's particularly intriguing about the UK wine market is the emerging dichotomy in consumer demographics. Regular wine drinkers aged 65 and over now represent between 25% and 30% of the UK's wine consumers – a significant increase from less than a quarter just five years prior. In contrast, legal drinking age (LDA) consumers aged between 18 and 34 have seen their numbers halve in the same period, now making up roughly a quarter of regular wine drinkers. Part of this shift could be attributed to the pandemic's restrictions, which displaced younger consumers from their usual social wine-drinking settings, prompting a pivot towards other beverage options.
The evolving drinking preferences are also reflected in the growing popularity of no- and low-alcohol products, championed by younger demographics who are becoming increasingly health-conscious. This shift is supporting a steady demand in alternative wine packaging formats such as cans, which are endorsed for their convenience and reduced environmental footprint. E-commerce has maintained its foothold in the wine retail space, with supermarkets and wine producers solidifying their online presence, and delivery apps gaining more traction. At the same time, wine bars are diversifying their offerings to attract a variety of consumer segments, ranging from adventurous connoisseurs to budget-conscious social drinkers, each with unique preferences and consumption habits. This move towards segmentation is a strategic response to the overall decrease in the number of regular wine drinkers – from just over 30 million to around 26 million in recent years. While traditional reds, whites, and sparkling wines continue to be mainstays in wine bars, it's the innovators in the UK wine industry who are reshaping the consumer experience. Companies like Defy, with their canned wines, and urban wineries like Renegade are challenging conventions, offering distinctive products that align with contemporary concerns of sustainability and convenience. Despite the rich landscape of wine offerings, the average net profit margin of a UK wine bar hovers at a modest 7.
Key Wine Bar Industry Players in the UK Market
As we explore the tapestry of the UK's wine bar industry, it is essential to recognize the pivotal role played by prominent market players who not only shape consumer experiences but also influence industry trends through their unique positioning and offerings.
- Davy's Wine Bars : With its roots deep in London's historic wine culture, Davy's Wine Bars stands out as an esteemed purveyor of fine wines. At Davy’s at St. James, patrons can delve into an exquisite selection of wines ranging from the robust Chardonnay Mâcon Villages from Burgundy to the vibrant Pinot Grigio Zapallares Reserva from Chile. The wine bar's commitment to quality and its embrace of both tradition and innovation make it a celebrated destination for wine enthusiasts.
- Humble Grape : This London-based wine bar and retailer has gained acclaim for its carefully curated selection of international wines. At Humble Grape Battersea, customers can savor the nuanced flavors of unique wines like the Australian Chardonnay from Yarra Valley, showcasing the establishment's dedication to sourcing distinctive wines that cater to the palates of discerning drinkers.
- Veeno : This Italian wine cafe based in Bristol champions the authentic Italian enoteca experience, offering customers a journey through Italy's rich viticultural landscape. Their selection, featuring classics such as a delicate Pinot Grigio and a robust Pinot Noir, encapsulates Italy's storied wine heritage and Veeno's commitment to bringing a slice of Italian wine culture to the UK.
- Appellation Wines : As a beacon of niche and boutique wine selections, Appellation Wines differentiates itself by spotlighting wines from lesser-known regions and smaller producers. With a penchant for the unique and the unsung, they conduct tastings that offer an educational slant, engaging wine lovers in the narrative behind each bottle.
- Matthew Clark : As a titan of the distribution landscape, Matthew Clark supplies a plethora of establishments with an extensive range of alcoholic beverages. Their approach is hands-on and customer-centric, ensuring that from trendy urban wine bars to quaint rural pubs, all have access to a quality selection tailored to their needs.
- Renegade Urban Winery : Embodying the inventive spirit of London's wine scene, Renegade Urban Winery is synonymous with pushing boundaries.
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Summary and extracts
1 Market overview
1.1 Definition and presentation
A wine bar is a theme bar focused on oenology. Clients generally have the opportunity to discover some original wines which are not often available for drinking and which are not found in the usual distribution channels.
The global market is stable. There are low barriers to entry, however revenue volatility also remains somewhat low as wine is a non-cyclical drink.
In the UK, the sector has experienced a period of growth for the period between 2014 to 2021 as wine consumption has risen. On top of this, the domestic production in the UK has gained traction over the last couple of years, which increases interest and demand for this type of wine enjoyed in wine bars.
The Wine Bar market is highly fragmented and characterized by a majority of independent players. This makes differentiation key to succeed in this industry.
Wine bars will continue to grow in popularity. The success of the sector in general, is highly dependent on consumer purchasing power and per capita incomes.
1.2 Global Market
The wine global market was worth US$ ***.* billion in ****, a **% decrease from ****. [***] This decline is mainly related to the health crisis and the trend before the crisis was upward. The turnover in **** was US$ ***.** billion, with a strong increase of **% compared to ****. The global market is expected to grow again to reach US$ ***.** billion USD by ****.
Size of the world wine market World, ****-****, in billion USD Source: ****
According to data from the International Organisation of Vine and Wine (***)
World wine production World, ****-****, million hectoliters Source: ****
In addition, the OIV estimates world wine consumption in **** at *** million hectoliters, up +*.*% since ****. However, consumption fell by *% in * years, between **** and ****.
Evolution of wine consumption World, ****-****, million hectoliters Source: ****
1.3 UK Market
The Wine Bars industry has recorded mixed conditions over the past five years, with revenue increasing strongly over most of the period, but plunging during COVID-** (***)-related lockdowns.
The market size, measured by revenue, of the Wine Bars industry is £***.*m in ****. The market size of the Wine Bars industry in the UK has grown *.*% between **** and ****. The market size of the Wine Bars industry in the UK increased faster than the economy overall.
Wine Bars in the UK - Market Size UK, ****-****, in millions of pounds Source: ****
1.4 Foreign trade of wine
The UN Comtrade database allows us to analyse the foreign wine trade in the UK.
Analysing wine imports and exports shows that Britain is a wine importing country, importing far more wine than it exports. In fact, the trade balance is always largely negative, generating a constant trade deficit.
Specifically, in **** imports were *.*** millions £ while exports were *** millions £ . Furthermore, analysing the trend, exports decreased from **** to **** while imports increased.
Imports and exports of wine Uk, ****-****, in millions of pounds Source: ****
Exports
With regard to exports, the UK's main partner countries in **** were China and the USA. China imported wine from the united kingdom to the value of *** million pounds while the usa imported wine to the value of ** million pounds. Together China and the US accounted for almost **% of UK exports.
Exports of wine by country Uk, ****, in % Source: ****
Imports
With regard to imports, the main partner countries of the united kingdom in **** were France and Italy. France exported wine to the UK to the value of £**** million while Italy exported wine to the value of £*** million. Together France and Italy accounted for just over ** per cent of UK imports.
Imports of wine by country Uk, ****, in % Source: ****
1.5 Covid Impact
The covid hit the UK wine bar sector hard; in fact, due to the lockdown all bars were closed for a period of time and even when they reopened they had to suffer restrictions in terms of hours and number of people allowed in.
This is reflected in the industry's numbers for ****; in fact, IBISWorld's data shows that the industry's turnover fell from *** million pounds in **** to *** million pounds in ****, a decrease of **.* % in one year. In **** there was a recovery but still not back to **** levels.
IBISWorld's data also shows that Covid has caused the closure of many businesses in the wine bars sector; in fact, the number of businesses active in the sector has dropped from **** to ****, a decrease of *** businesses. In **** there was a recovery but still not back to **** levels.
Furthermore, another negative effect that the pandemic has caused to the wine bar sector is the boost it has given to wine e-commerce. In fact, online wine stores represent a dangerous competitor to wine bars. E-commerce saw a huge boost during ****, with many regular UK wine drinkers preferring to shop online including via supermarket websites. Looking ahead, existing online wine shoppers are anticipating buying more wine online ...
2 Demand Analysis
2.1 Wine Consumption
In ****, wine consumption amounted to **.* million hectoliters. For the past fifteen years the volume cleared for consumption has mostly been stable. For the entire period under consideration volumes have been over **.* million hectoliters.The data includes both, wine produced in the UK and wine imported from other countries. Wine drinkers in the United Kingdom consumed about *** milliliters of wine per week in ****. Most purchases were done on-site at wineries.
Wine consumption in the United Kingdom UK, ****-****, in *,*** hectoliters Source: ****
2.2 Wine Drinkers
The number of regular wine drinkers in the UK is declining, falling by * million in the past five years to ** million regular wine drinkers. **% of adults are now regular wine drinkers, compared with **% of adults being wine drinkers in ****.
Number of wine drinkers in UK UK, ****-****, in millions Source: ****
Within the UK’s regular wine drinking population, the proportion of mature drinkers (***) of those who were aged between ** and ** years were regular wine drinkers. Today, that proportion has halved, with only **% of todays **-** year olds being regular wine drinkers.
Like many developed countries, the UK has an ageing population, so, it is not surprising to see a growing older wine drinking population. Two years ago, Boomers and Seniors (***) were consuming wine at a fairly similar frequency, with older drinkers slightly ahead. The latest data of Wine Intelligence from July **** shows that proportionately, Boomers and Seniors have increased their frequency of wine consumption more than any other age group.
age of wine drinkers in UK UK, ****, in % Source: ****
2.3 Segmentation of wine drinkers
It is interesting to analyze Wine Intelligence' s research that segmented wine drinkers in UK into * categories based on different factors (***)
Adventurous Explorers: Mid-aged and older confident wine drinkers for whom wine is an important part of their lifestyle, who enjoy discovering new wine. A larger segment than in previous years, they are savvy drinkers who seek out good value ways to explore the category, and feel able to experiment within sub-categories thanks to their higher knowledge and confidence levels
Kitchen Casuals: The oldest segment, they are infrequent and low-spending wine drinkers, with very few consuming wine in the on-trade. They show limited interest in the wine category, sticking to the narrow range of wines they know, and typically only buy wine for specific occasions
Senior Bargain Hunters: One of the oldest segments, they are infrequent wine drinkers. Time in the category means they have reasonable wine knowledge, but purchase from a narrow repertoire of styles and brands, and are strongly value-driven
Generation Treaters: One of the younger segments (***), they are frequent drinkers and the highest spenders. They are typically less experienced in the wine category and have lower levels of knowledge, butexude confidence and are keento explore the category more. ...
2.4 Consumer trends
Wine experienced a short-term volume boost in the UK, and although the category will adjust downwards, IWSR market data shows that **** was the first year to see still wine volume growth after more than a decade in decline. There is some evidence that younger legal drinking age (***) wine drinkers are returning to the on-trade, but the reduction in on-trade participation caused by the ****-** lockdowns does not appear to have recovered yet.
The population of regular UK wine drinkers has also continued to grow older, and at a faster pace than the overall population of the United Kingdom. Why? In the short term, the pandemic drove younger LDA consumers away from the wine category and towards other beverages, as their main wine drinking occasions were in social settings and often on-trade locations.
A growing interest in health and wellbeing could be a contributor to the shrinking of the regular wine drinking population and its age distribution. Gen-Z (***) and Millennials are far more likely to be abstaining from alcohol altogether, or actively moderating their consumption, compared with older consumers. This phenomena also boosts demand for no- and low-alcohol products and should continue to gradually shape the market.
Channel preference has remained broadly ...
2.5 Most popupalar wines in the UK
These are the most popular wine brands in the UK, according to recent approval ratings gathered by YouGov.
While cheap and cheerful Australian and American brands do particularly well, Champagne, at least for special occasions, is also a favourite for the average drinker in the UK. What is especially clear is that the public has quite the sweet tooth, which may partly explain the stereotype about British dentistry.
These are the wine brands which the highest percentage of those surveyed expressed a positive opinion about, according to the survey from the first quarter of ****.
The ** most popular wine brands in the UK UK, ****, in % Source: ****
3 Market structure
3.1 Market Structure
The Wine Bars industry in the UK is labor intensive which means businesses are more reliant on labor than capital. The highest costs for business in The Wine Bars industry in the UK as a percentage of revenue are Wages (***).
The Wine Bars industry in the UK has low market share concentration and there are no companies with more than *% market share. The primary negative factors affecting this industry are high competition and low barriers to entry.
Real household disposable income is a significant driver of industry revenue because it determines how much money people have to spend on leisure activities, such as visiting wine bars. Patrons are more likely to frequent more expensive establishments such as wine bars when disposable incomes rise. Real household disposable income is anticipated to increase in ****-**, providing an opportunity for industry demand.
There are *,*** Wine Bars businesses in the UK as of ****, an increase of *.*% from ****. The number of businesses in the Wine Bars industry in the UK has grown on average over the five years between **** - ****.
London, South East, and North West are the regions with the most number of Wine Bars businesses in the UK.
Wine Bars in the UK - ...
3.2 Cost and Profitability of wine bars in uk
Based on the data from the BinWise portal, we can estimate the average cost of opening a wine bar in the UK and the profit margins, net and gross, that can be made.
How Much Does Opening a Bar Cost?
The average cost of opening a bar is $***,***. The average cost of opening and running a bar for the first year is about $***,***.
These numbers consider the cost of both renting/leasing and buying and labor cost. They also include the cost associated with how to get a liquor license. They’re meant to give a ballpark figure regardless of how you secure a property and play a major role in your P&l restaurant statement.
How Much Does Operating a Bar Cost?
It costs about $**,*** per month in recurring operating costs to run a bar. It includes alcohol costs, staff wages, licensing fees, and rent or mortgage payments. This is also called the prime cost.
It's important to learn how to manage cost for restaurant business to succeed.
What’s the Average Profit Margin for a Bar?
The average gross profit margin for a bar is between ** and **%. That's enormous considering businesses like general retail and automotive are around **%.
And ...
3.2 Value Chain
The value chain and the functioning of the wine market and production and distribution in UK are summarised below. As wine bars are among the distribution outlets of this larger market, their specific value chain is given below:
3.4 Wine bars suppliers: Wine Wholesalers in the UK
Below is an illustrative review of the major UK wine wholesalers.
Appellation Wines
Appellation Wines was opened in Dalry in November **** by Ashton, with the underlying philosophy of stocking wines that cannot be found elsewhere. They champion the smaller producer and the lesser-known wine regions. In January **** they opened their second shop, at ** Comely Bank Road (***). Weekly tastings are held in both shops, alternating between wine, beer and spirit tastings. They also take great pleasure in hosting bespoke corporate and private tastings.
Matthew Clark
They're a national drinks wholesaler, with over *** years' experience supplying drink products, hospitality training, labor management and marketing support to over **,*** On-Trade premises in the UK. They aim to put customers at the heart of everything they do which is why their business is structured the way it is. They operate nationally but they have regional business units which mean their customers have a local and senior management team that run the sales and operations teams in that part of the country, at a real regional level
Laurence Smith & Son
Laurence Smith & Son was established in **** by the grandfather of the present owner, and nowadays a fourth generation of the Smith family (***) to all sections of ...
3.5 Wine Production
This statistic shows the total production volume of wine in the United Kingdom annually from **** to ****. In ****, approximately **,*** hectoliters of wine were produced in the UK. This marked a slight increase from the output of the previous year when around **,*** hectoliters were produced. It is also noticeable that the volume of wine produced increased dramatically in **** where it reached its peak
Wine production volume in the United Kingdom (***) UK, ****-****, in hectoliters Source: ****
4 Analysis of the offer
4.1 Different types of wine
Below we have provided an illustration of the main categories of wine found in the UK. Within these categories fall the vast majority of wines sold in the UK.
Red wines are made from black grapes fermented with the grape skins (***), seeds, and stems. Red wine is high in tannins, which causes that bitter, dry taste in your mouth after you take a sip.
White wines are made from both white grapes and black grapes. But while red wines are fermented with grape skins, white wines are not. Instead, the skins are separated so only the clear grape juice is used. White wine has few tannins; its acidic nature is what outlines its fresh, crisp and tart flavours.
Rosé is a wine known by its blush or pink colour. This pretty colour is created when the juice of black grapes is fermented with the skins for a very short period of time, from a few hours to a few days until the juice turns colour. Like white wine, it is also low in tannins, though some rosés are dry. Rosé is a popular crowd-pleaser, especially for summertime parties, and a great choice as a starter wine because of its light, ...
4.2 Price Analysis
Below we have provided an illustration of the prices of the main wine categories in * major UK wine bar chains. We have referred to prices for a glass of wine (***).
4.3 Leading wine brands by sales revenue in the UK
As of ****, the leading brand of wines by sales in the United Kingdom was Hardys. Hardys generated just over *** million British pounds in the sale of wine that year. The leading competitor, I Heart, had earned approximately **.* million British pounds in wine sales.
Leading wine brands by sales revenue in the UK UK, ****, in million GBP Source: ****
4.4 Supply trends: Innovation
In the UK wine industry, more and more companies are being formed that focus on product and process innovations in order to achieve higher quality, more sustainable products more quickly.
One UK business which embodies much of this thinking and is literally repackaging how we drink and think about wine is Defy, which makes canned wine using Italian grapes. Defy’s motto is simply ‘respect for wine, not it’s traditions’. Speaking to Leslie Owensby about his decision to found a brand of canned wine, he tells that me that ‘cans are freedom’. He explains that if he fancies a Sunday tipple, he doesn’t have to uncork a whole bottle which may sour by next Friday. His ***ml cans are also lighter than wine bottles, they take up less space and they’re up-cycleable, compared with glass wine bottles which are recyclable but often end up as hardcore. Cans generally produce **% less CO* compared to their glass bottle equivalents.
The canned wine market is gathering pace, with a recent global valuation of £***M and a **% compound annual growth rate.
Renegade Urban Winery is a cutting edge urban winery based in E**. Founded in ****, we buy top quality, hand harvested grapes ...
5 Regulations
5.1 Regulations
In England and Wales, the Licensing Act **** is the legislation used to license premises in their sale of alcohol. It forms the backbone of UK alcohol laws and sets the laws that any business selling alcohol must follow, including which licenses they need to apply for and what they must do to responsibly carry out the sale of alcoholic beverages. The Act also regulates the provision of other licensable activities, namely regulated entertainment — such as showing a film, hosting a sports event, or a performance of live music — and late-night refreshment.
As set by the Act, to get permission to perform these licensed activities, you must apply for a license from your licensing authority (***) — usually a local council — who is required to have a licensing committee to approve or deny any applications. The entire area of law and policy around alcohol licensing is overseen by the Home Office.
The main objectives of The Licensing Act **** are:
the prevention of crime and disorder, public safety, the prevention of public nuisance, and the protection of children from harm.
Because these are the aims of the Act, all of the laws it sets out are intended to ensure that your premises will uphold them. ...
6 Positioning of the players
6.1 Segmentation
- Vagabond
- Davy's
- Veeno
- Humble Grape
- Farr Vintners Ltd
- Liberty Wines
- Moët et Chandon (Groupe MHCS / LVMH)
- Gruppo Caviro
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